- Retailers will still have to absorb the increased costs of a planned 2.6% business rates rise in April
- But measures to boost consumers’ disposable incomes welcomed.
Wednesday 5th December 2012
Commenting on today’s Autumn Statement, David McCorquodale, head of retail at KPMG, said:
“Retailers have been pleading for the Chancellor to freeze business rates at their current levels and the failure to do so today is a bitter blow indeed for the sector. By its nature, the retail sector is property intensive and so the planned 2.6% rise – estimated at £175m across the sector – will burden retailers with further costs that they cannot escape or necessarily pass on.
“This unwelcome rise comes at a time when the sector is battling significant challenges, from reduced consumer spending to the urgent need to invest significantly in their multi-channel operations. With growth in the economy forecast at only 1.2% next year, retailers will have to work even harder in their attempts to swallow this bitter pill.
“However we must recognise that the Chancellor has done what he can to help consumers by increasing personal allowances and cancelling the planned fuel duty rise, which may help footfall in out-of-town retail parks. The decision to cancel this rise, while increasing the personal tax allowance will leave consumers with a little more cash in their pockets, which retailers hope they will spend at the tills.
“The roll out of ultra fast broadband to smaller cities across the UK will be welcomed by retailers and will make it easier for those communities to shop online.
“Today’s Autumn Statement may have thrown a few crumbs to consumers, but the overall message from the Chancellor is that austerity and low growth are here to stay and this will continue to dampen consumer confidence for a while yet. Retailers are in for another tough year and will have to think of new ways to drive sales while swallowing a hefty rates rise to boot.”
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